By:JOSEPH KELLARD
Jandi's Nature Way, a health food store in Oceanside, processes and sells freshly extracted wheat grass and vegetable juices that customers can drink at its juice bar. The store, however, has a sales tax audit pending regarding these items that New York State deems taxable, but that Jandi's never taxed.
According to state sales tax law, any food products consumed on the premises of a business is taxable, and products consumed for the maintenance of health or prevention of disease are exempt from tax, which include substances used internally or externally that are not ordinarily considered drugs or medicines, such as cod liver oil and castor oil.
The audit began in 1999 when Jandi's owner Howard Chasser met with an auditor and audit supervisor. While inspecting what products Jandi's was and wasn't charging sales tax on, the issue of the taxability of freshly-extracted wheat grass and vegetable juice came up. The sales tax auditor, Martin Elfant, held the position that it is a taxable item.
"They basically used the analogy that it was the equivalent of walking into a deli and getting a glass of milk," Chasser said. "We are putting forward that wheat grass juice and vegetable juice should not be taxed, any more than a shot of NyQuil consumed in a doctor's office should be taxed."
To contest the state's position, Chasser wrote Albany to request an advisory opinion, citing all kinds of different [scientific] research classifying these juices as health products and claiming medical benefits, such as wheat grass being used in cases of gastro-intestinal distress, and thus not taxable under state tax law. Chasser said the advisory opinion unit sent their final audit two years later, which maintained the state's position that the juices are a food item, not a health product, consumed on the premise of an establishment and thus taxable.
"The law does not state that the items even have to work," Chasser pointed out. "It just says that the people consume 'for the maintenance of health,' and unquestionably that is why people consume it."
The next legal avenue Chasser took was to apply for a conciliation conference to discuss the advisory findings. He brought to the conference five consumers who told stories about how they had cancers and other ailments that were helped with wheat grass and vegetable juices, one or two of them whose oncologists recommended they take these items.
Chasser claims that, Wayne Clark, conciliation conferee, told him at the conference that he was without the authority to overrule an advisory opinion, but wouldn't rule otherwise if he had that power.
"It's amazing...how they will not even open their mind to try to understand that this is something that they have not even looked at before," Howard said.
Michael Bucci, spokesperson for the tax audit unit, told the Herald that privacy rules restrict the unit from commenting about its dealings with a taxpayer.
"The law is geared to give them 100 percent protection," Bucci said. "They are free to comment on any of their dealings with the department, and we are quite limited by law as to what we can comment on."
Taking the matter to the next level, Chasser applied to the tax appeals board and contacted local political representatives. Assemblyman Bob Berra recently drafted legislation to clarify the intent of the existing tax code to include wheat grass and vegetable juices.
"It's kind of odd that if you consumed the product inside it was taxable, but if you take to go it was non-taxable," Barra told the Herald. "The whole thing just didn't make much sense."
Bucci did say that the unit's auditors conduct their audits according with department guidelines that are established to enforce the state tax laws. "So if [Chasser] disagrees with our reading of the tax law," Bucci said, "he can certainly appeal it and he can certainly work to change the law."
